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Re: What Are Social Security Wages On A W-2

Panther is right in his disclaimer when he cites the economics axiom to the efffect that you get what you pay for.

While the previous response is good as far it goes, it doesn't answer the question. Social Security wages are the wages on which you are taxed for Social Security (6.2%). It may differ from gross wages because certain non-taxable items are non-taxable for income tax purposes and NOT Social Security and Medicare (1.45%). Additionally, Social Security wages have a ceiling of $97,500 for 2007, which changes annually, whereas Medicare wages have no limit.

Social Security's Old-Age, Survivors, and Disability Insurance (OASDI) program limits the amount of earnings subject to taxation for a given year. The same annual limit also applies when those earnings are used in a benefit computation. This limit increases each year with increases in the national average wage index. We call this annual limit the contribution and benefit base. For earnings in 2007, this base is $97,500.

The OASDI tax rate for wages paid in 2007 is set by statute at 6.2 percent for employees and employers, each. Thus, an individual with wages equal to or larger than $97,500 would contribute $6,045.00 to the OASDI program in 2007, and his or her employer would contribute the same amount. The OASDI tax rate for self-employment income in 2007 is 12.4 percent. (Tax rates of 1.45 percent for employees and employers, each, and 2.90 percent for self-employed persons, are applied to all earnings—without a taxable maximum—under Medicare's Hospital Insurance program.)

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